Acquisitions

12 Months Ended

Dec. 31, 2020

Acquisitions

Acquisitions

Note 2 - Acquisitions

In November 2020, Seaboard’s Pork segment purchased substantially all of the operating assets of Hitch Pork Producers, Inc., a hog production company that previously supplied hogs to the Guymon plant. The purchase price of $27 million included $23 million in hog farms and related assets and $4 million in inventories.

On October 28, 2019, Seaboard’s CT&M segment increased its ownership percentage from 50% to 100% to obtain control of Seaboard Overseas Peru S.A., formerly known as ContiLatin del Peru S.A., an importer and trader of grains in Peru. Seaboard accounted for this transaction as a business combination achieved in stages. Total consideration for the purchase price included $7 million of cash paid, net of $2 million cash acquired, Seaboard’s previously held equity interest was remeasured at its acquisition-date fair value of $9 million and pre-existing affiliate trade receivables fair valued at the acquisition date of $13 million.

The following table summarizes the purchase price allocation resulting from this consolidation:

(Millions of dollars)
Receivables	$	33
Inventories		55
Other current assets		7
Property, plant and equipment		12
Intangible assets		1
Total fair value of assets acquired		108
Lines of credit		(65)
Current maturities of long-term debt		(2)
Other current liabilities		(6)
Long-term debt, less current maturities		(6)
Total fair value of liabilities assumed		(79)
Net fair value of assets acquired	$	29

On January 5, 2018, Seaboard’s CT&M segment acquired substantially all of the outstanding common shares of Borisniak Corp., Les Grands Moulins d’Abidjan, Les Grands Moulins de Dakar, Eurafrique, and Societe Mediterraneenne de Transport, collectively operating as Groupe Mimran (“Mimran”). Mimran operates three flour mills and an associated grain trading business located in Senegal, Ivory Coast and Monaco. This acquisition increased Seaboard’s flour and feed milling capacity and annual grain trading volume.

The total purchase price for this acquisition based on the acquisition date fair values and using the exchange rate in effect at the time of acquisition, was $324 million consisting of:

(Millions of dollars)
Cash payment, net of $64 million of cash acquired	$	264
Euro-denominated note payable due 2021, 3.25% interest		46
Contingent consideration		14
Total fair value of consideration at acquisition date	$	324

The fair value of the contingent consideration, classified in other non-current liabilities in the consolidated balance sheet, is dependent on the probability of Mimran achieving certain financial performance targets using earnings before interest, taxes, depreciation and amortization (“EBITDA”) as a metric. The contingent consideration ranges between zero and $48 million payable between five and eight years following the closing, at the discretion of the sellers. The note payable and the contingent consideration are noncash transactions that were excluded from the consolidated statement of cash flows for the year ended December 31, 2018.

The following table summarizes the purchase price allocation resulting from this acquisition:

(Millions of dollars)
Current assets	$	83
Property, plant and equipment		91
Intangible assets		78
Goodwill		148
Other long-term assets		4
Total fair value of assets acquired		404
Current liabilities		(38)
Other long-term liabilities		(38)
Total fair value of liabilities assumed		(76)
Less: Noncontrolling interest		(4)
Net fair value of assets acquired	$	324

The intangible assets include $28 million allocated to trade names, amortizable over 9 years, and $50 million allocated to customer relationships, amortizable over 9 years. Goodwill represents Mimran’s market presence and its experienced workforce. The intangible assets and goodwill are not deductible for income tax purposes.

Certain Mimran entities acquired are accounted for on a three-month lag and use local currency as their functional currency. Translation gains and losses are recorded as components of other comprehensive income (loss).